Evaluating business strategies for thermal energy storages: Participation in the Nordic electricity markets

Abstract

The lower costs of thermal energy storages compared with electrical energy storages encourage to prefer sector coupling and storing electricity in the form of heat instead of electricity. In this study, the profitability of a thermal energy storage operating in electricity markets is assessed. The electricity markets considered are day-ahead markets and reserve markets. The study is a case study of high-temperature sand energy storage in the context of the Finnish electricity markets. An optimization method based on a specific price limit mechanism for storage use is developed. The results show that it is not profitable for the storage to purchase electricity from the day-ahead market and sell the heat produced to the district heating network at a fixed price. Participating in reserve markets is a significant part of the sustainable business for the thermal energy storage, but the profits are dependent on whether the storage runs at full power and participates only in the down-regulation or runs mostly at half power and participates in both up- and down-regulation. More volatile electricity markets indicate higher profits in reserve markets and a better profitability of the thermal energy storage.